Hyderabad, India -- China's central bank is seeking to cool down overheating economic sectors such as real estate as well as cut massive foreign exchange reserves, a top government official revealed.

Chinese vice minister of finance Li Yong (L), Japanese Finance Minister Sadakazu Tanigaki (C) and ADB President Haruhiko Kuroda (R) attend a seminar at the Asian Development Bank (ADB) annual meeting in the southern Indian city of Hyderabad May 4, 2006. Finance ministers from China, Japan and South Korea called on Thursday for more financial cooperation among Asian countries and said they would look further into the idea of regional currency units. [Reuters]

The statement by Li Yong, Vice Minister of Finance, at the annual Asian Development Bank meeting in this southern Indian city came as he said economic growth in 2006 could hit 9.5 percent without new fiscal and monetary steps.

The concern about overheating comes after the economy expanded by faster-than-expected 10.2 percent in the first quarter over the same period the previous year, after posting a rate of 9.9 percent for all of 2005.

"During the first quarter of 2006 we have tried to balance investments in certain sectors," the minister told delegates.

"These sectors such as real estate and steel became overheated in 2005. Our central bank is trying to cool down overinvestment in these sectors," he said.

Housing has become so expensive in China that seven out of 10 urban families cannot afford their own homes, the state-owned Xinhua news agency said.

In April the People's Bank of China boosted the one-year benchmark lending rate by 27 basis points to 5.85 percent to brake credit and control "excessively fast" release of bank loans.

Page:

1

2